Culture at General Electric and the Strategic Shifts made by Jack Welch
- Highlights:
- Focus upon simplicity
- Be ready to change with time
- Avoid any form of clutter
- Let communication flow
- Imagination, courage, expertise and inclusion
- Review regularly to improve employee- resources compatibility.
In a 1989 interview Jack Welch highlighted his focus upon simplicity and how it helps reduces hindrances to work flow. Growth in the business world cannot be achieved without a strong culture. A good business culture requires focus on certain things and in this fast changing business world, there is nothing better than you keep changing with time. Innovation has now become the buzzword of the 21st century and you cannot progress without having an innovative culture. Today, businesses are vulnerable to disruptions and new businesses like Uber and AirBnB have proved that the businesses that are not ready for change can be decimated by the power of change. We have seen things happening all around the world that influence us and make their power felt.
Organisations may need to readjust their course and want to take a different route because economic and technological changes can make it difficult to walk the same line further. Jack Welch is known as a visionary leader for his smart chess like moves. The last three decades have seen some very fast changes happening which have affected both big and small businesses. The changes Jack Welch made in his times were set within the context of their respective eras. Cultural change can help at bringing bigger changes which can help businesses grow faster. This has been proved by most leaders including Steve Jobs whose ruthless drive to achieve progress is well known. Alan Mullally and his total revival of Ford is another great story that has shown how powerful a tool culture is and how it can empower an entire global organization. On top of all, these leaders have proved that a cultural shift helps at handling bigger pressures and can be the first step towards strategic shift.
The CEOs have to act like smart captains that need to navigate their ships using smarter techniques since every competitor is riding at top speed and trying to decimate his nearest competitor. In the last two decades, GE made some cultural shifts that can be understood in the context of their respective eras. During the 1990s there was a need for operational excellence. It was a time when quality was very important and to achieve it you needed to focus upon making leak proof processes, bring operational costs lower and operational execution higher. Jack Welch focused on six sigma to bring down costs, make quality better and improve the operations not just in terms of infrastructure but also in terms of people. It resulted in tightened control, higher focus on operations, and a cost conscious organization.
In the 2000’s, the priority was innovation. Disruptions had left businesses vulnerable and operational excellence was the demand of time. With the arrival of new businesses several became obsolete and several experienced upheavals. This decade was special for another reason too which was the rise of strong competitors and better opportunities. Welch’s successor was Jeff Immelt. He drove GE on the path of growth through innovation. Now the focus was on training people to understand innovation and to protect and encourage ideas of growth. The leader launched a massive commercial training operation to build massive commercial and marketing capabilities. Focus was also laid on other dimensions of production like imagination, courage, expertise and inclusion. The result of this endeavour was faster growth and larger scale and especially in the emerging markets like India, Brazil and China as well as the other smaller markets like Chile, Algeria, Angola and Vietnam. Now, the recession has passed and new forces are driving changes across the world. There are three such major faces driving these changes across the world. Geopolitical issues can now trigger larger waves that can override the predictions made by the best of think tanks. The falling oil prices were an example of how geopolitical factors could change the business dynamics in this world in very little time. While it is good news for some businesses, it is bad for the others. Another example is Ebola. It has not happened just in Africa but spread in other parts of the world too.
The changing composition of the workforce is also an important force reshaping the business dynamics in this world. Focusing on their taste and inspirations helps us build the right culture since they are and will remain for several coming years, the most important part of the workforce inside offices all across the world. GE commissioned group of millennial that it called the Global New Directions group in order to help GE know what type of culture they wanted. The command and control model that the baby boomers were used to was not going to work anymore with the millennial. They showed that they wanted horizontal, more agile models where connection and communication happened at a faster pace. A third focus at GE was to engage the employees better. It is why the organization used employee survey tools as a tool for cultural change. The GE employees told the leaders clearly that there was a need for cultural change. They wanted decentralisation. A decentralised structure would be more simple to do business with. Power must be where the action is. You ask your employees to work, assign them roles and tasks but forget to provide them the right authority, making them feel deprived and end up creating a system unproductive and lacking energy. This is not what today’s employees want and so employee empowerment is essential. GE has responded to the new demands and changing workforce dynamics by using the formula of simplification. Simplification includes a significant focus on customers, leaner management and also to reimagine Information technology as a source of leverage. Being digitally powerful is important because in an era of digital, things cannot be achieved without doing things the digital way.
GE also launched fast works based on lean start up principles that resulted in better and faster outcomes for its customers. This new operating model was not going to work without using a new culture and enforcing new rules. This new cultural template GE used was called GE Beliefs since it was created to make people think in a new way. Some of the most important points that this new cultural template focused upon were customers, speed, learning and adaptation, empowerment and results. Your customers decide your success and if you want to go faster, you need to be lean. To win you need to learn and need to adapt as well as empower and inspire each other. All these things are essential to deliver in a world full of uncertainties. these new changes had a clear focus which was to add speed, customer focus and agility to the GE world. The most interesting part of the cultural transformation story at GE was that these beliefs were crowdsourced from the GE employees.
This was an attempt to make a culture that the employees wanted. This is a fast moving world where you do not review your culture and structure just once an year but make it a continuous process. This has accelerated the entire process. It is why GE has moved away from the annual planning process to a more continuous process of checking on the environment and context to make changes whenever and wherever required. It is also important to review the people and organisational capability fit. GE has taken a more real time approach for performance appraisals than making it once an year review. The new culture has focused on three things, speed, simplicity and being customer centered. If an organization does not note its culture, it creates obstacles in its own path that discourage productivity. Moreover, organisations must also examine their culture constantly in order to improve their operational flow.
From Ford to Apple, Amazon and Microsoft, business have showed that a cultural shift can shift several forces and make the environment favourable for an organization. Culture and environment are important elements that have the potential to improve your organisation’s productivity. Setting these factors right gives your staff the energy and power they need to be productive. Brands must show customer focus and should remove cuter by focusing on simplicity.
This article is based on an HBR article by Raghu Krishnamoorthy published in 2015.